Clearing the air

Summary

The first Emissions Reduction Plan is now in place. It aims to set out actions for each sector of the New Zealand economy to help New Zealand meet its emissions budget.

The ERP is a soft law instrument, intended to guide the actions of companies, Government and individuals.

All the actions outlined are meant to ensure that New Zealand plays its part while empowering Māori as partners in this endeavour. Decarbonisation should be equitable and should focus on nature based solutions, while leading to a more productive, sustainable and inclusive economy than New Zealand has now.

NZ’s first Emissions Reduction Plan is in place

New Zealand has its first Emissions Reduction Plan (ERP) – a document containing actions to help New Zealand meet its current emissions budget until 2025.  The ERP is the result of a cross-Government effort to identify and nominate actions that can be taken to reduce emissions and decarbonise the economy. That level of interdepartmental effort is an achievement in itself.

The ERP is one piece of the puzzle, one among many tools (emissions budgets, emissions trading scheme (NZETS), national adaptation plans, etc). These tools, together, are meant to enable New Zealand to meet its long term goal of net zero by 2050.

ERP is a complementary tool to emissions budgets and the NZETS

Climate change impacts all areas of the economy. To date, the NZETS has been the main tool to address this, by pricing greenhouse gas emissions from certain activities. Activities covered by the NZETS form only a fraction of the economy.

In its current form, the NZETS alone will not drive sufficient changes across all activities to allow New Zealand to meet its Paris Agreement goal, so more tools have been added. Among them, a 5 yearly emissions budget covering emissions from all sectors of activity in New Zealand. The Government announced the first three budgets earlier this year, covering the period to 2035.

ERP sets targets and actions to meet emissions budgets

The ERP sets out a path to achieve these budgets. It outlines some 300 actions, spread across all areas of activity. They are intended to guide public and private sector activity.

The ERP shows an understanding that all players (public and private) and all sectors of the economy must work together towards this common goal if New Zealand is to meet its international obligations under the Paris Agreement.

Many of these actions are soft law – Government initiatives and policies that may or may not be enshrined into law. Public sector decision-makers may take into account the ERP in the exercise of a public function. While this isn’t a strong directive, it offers protection to public sector bodies challenged in relation to how they considered (or not) the ERP as part of their decision-making. It also means that the Government can ask the public sector to follow these initiatives.

ERP underpinned by five guiding principles

The ERP is based on five principles which inform actions within each key sector, including transport, energy, water and waste. These guiding principles are:

1. Playing our part - The ERP is one way that Aotearoa is playing its part in the global movement to limit temperature rise to 1.5 degrees Celsius. This is an important part, that is also enshrined in legislation.
2. Empowering Māori - The ERP acknowledges that climate change may particularly affect tangata whenua and the Māori economy. The Government restated its commitment to working in partnership with Māori to embed partnership and representation, ensure Te Tiriti principles are upheld, te ao Māori is elevated and tangata Māori actions are enabled.
3. Equitable transition - The ERP emphasises that the transition to a low-emissions economy can benefit all New Zealanders through new jobs, lower cost of living, increased well-being and increased living standards. There has been concern that impacts from decarbonising the economy may not be equitably spread, and they may affect poorer communities harder. This principle intends to counter that concern.
4. Working with nature - In recognition of the links between the climate and biodiversity crises, the ERP prioritises nature-based solutions in planning and regulatory systems and focuses some of the efforts on also tracking biodiversity as part of the ERP reporting. The aim is to integrate work so as to achieve climate, biodiversity and wider environmental outcomes. This has the potential to cause far-reaching consequences, as some activities would benefit climate or biodiversity, but not both. The challenges that arise from the application of the National Policy Statement for Freshwater Management or the draft National Policy Statement for Indigenous Biodiversity show that there isn’t always a straightforward path that benefits both climate and biodiversity. The benefits and costs of action might be felt in different locations or at different times (in accordance with the adage that ‘you have to break some eggs to make an omelette’). While the aim of finding solutions that benefit climate and biodiversity is commendable, there will be cases where the two are incompatible (at least in the short term) and there is little guidance so far as to which one, between biodiversity and climate change, should be given priority.
5. A productive, sustainable and inclusive economy - As a result of implementing the ERP, the outcomes should be an economy that is more productive sustainable and inclusive than the one today. The ERP paints climate action in a positive light, as an investment in higher paying jobs and more productive businesses, rather than a cost. This outcome relies on addressing a number of issues that impact across a number of sectors of the economy.

Emissions pricing

Recalibrating the NZETS so it is aligned with the emissions budgets and can drive emissions reductions; integrating agriculture within an emissions-pricing mechanism; creating a framework for a voluntary carbon market.

Funding and financing the transition

Even the best laid plans don’t come to pass without funding. The ERP describes in more detail some of the Government funding made available:

• the Climate Emergency Response Fund,
• Sovereign Green Bonds
• the Green Investment Finance
• the Crown’s commitment to a new responsible investment framework
• a State Sector decarbonisation Fund to achieve a carbon neutral public sector by 2025.

Government investments should take into account climate change as part of ensuring public funds are invested wisely. This would apply to all projects, big or small, and has influenced Government procurement rules.

While there is a focus on Government funding, decarbonisation funding can also come from local government and from the private sector.

Planning and infrastructure

How we use land and other natural resources drives emissions and informs how we can adapt to climate change. The planning and infrastructure systems can be used to reduce emissions, build resilience and improve wellbeing across urban and rural land. Infrastructure decisions should account for the whole of life costs and benefits of that investment, and take climate change into account at every stage, from planning and design through to its operation.

That is why it is important to ensure that the planning system which will guide decisions for both private and public sectors, for years to come, is fit for purpose. Reform of the planning system is under way, with draft bills for two new pieces of legislation dealing with planning due later this year.

Research, science, innovation and technology

Similar to the Climate Change Commission’s advice to the Government, the ERP emphasises R&D as an important element that will enable New Zealand’s transition to a low emissions economy. The ERP acknowledges the very important role of the private sector in R&D across all areas from energy to agriculture.

Circular economy and bioeconomy

Moving New Zealand to a more circular economy will reduce emissions by making better use of resources. The public sector has already started as part of the Carbon Neutral Government Program. A thriving bioeconomy will help to transition New Zealand to using more renewables in the form of bioresources.

ERP implications for Transport and Energy

These five guiding principles are expected to guide the action for each of the key sectors of the New Zealand economy. Part 2 of our review of the ERP will discuss the actions proposed in the ERP for the Transport sector.  

About the Authors

Ana Coculescu is a senior associate in the Wellington Environment and Planning team. She has broad environment and planning law experience, having worked as an environment and planning solicitor both in private practice and in government roles in Australia (2005-2018) and New Zealand (since 2019).

Liam Bullen is a Solicitor in the Environment and Planning team. Liam has worked at Dentons since 2019 on a wide range of environment and planning issues for both public and private sector clients.